Breakdown: What the key players are saying about Seattle’s ride-sharing cap

UberX, Lyft and Sidecar will need to play by Seattle’s rules if they want to operate in the Emerald City.

Councilmember Mike O’Brien speaks at Monday’s City Council meeting.

The Seattle City Council today voted 9-0 to enact new legislation that will limit the three app-based transportation network companies (TNC) to 150 drivers on the road at any given time. The same goes for any other new startups who employ everyday drivers to shuttle people around town.

Here’s a recap of what went down today, what stakeholders are saying, and what’s going to happen from here:

What happened today: The Council already met on Feb. 27 at a subcommittee meeting where it voted 5-4 on the proposed ordinance. Today’s vote makes that official. Mayor Ed Murray cannot veto the vote since there were at least six “yay’s,” and once he signs the bill, it will take effect 30 days from now.

There were also several amendments approved, the most important of which forces the TNCs to abide by the state’s requirements for commercial insurance. There was another amendment that prevents TNCs from creating spinoff companies — Uber cannot create an UberY, UberZ, for example.

What the Council said: Three councilmembers were in favor of an amendment proposed today by councilmember Tom Rasmussen that would have lifted any sort of cap on the TNCs. But only Sally Bagshaw and Tim Burgess gave their approval, while the other six councilmembers wanted caps.

“The headline should not read that the City Council capped anything. It should read as the City Council allowed ride-shares to come into an industry,” Harrell said. “The bill sets up a conceptual framework for us to start stepping out of the regulatory arc and let technology and consumer choice dictate what we’re about to do. But we are not there yet.”

Sally Clark, who chaired the committee, noted that “what we decide today isn’t a complete fix, but it is a start.” Harrell said something similar, adding that “we’re still missing the mark on a few key issues, but this is about as good as it’s going to get.”

Rasmussen said that while he thinks there should be no caps — “let’s not cut supply when demand is so high,” he noted — he liked the improvements that were made from the original bill. Moreover, Rasmussen said that taxi drivers now have an opportunity to improve their service.

“This is a wake-up call for taxi industry,” he said. “It has to change in order to thrive. Now you have time to do that.”

Eastside For-Hire manager Samatar Guled speaks to Mayor Ed Murray during a rally last month in support of ride-sharing startups.

What the taxi industry thinks: Dawn Gearhart, who represents the Western Washington Taxicab Operators Association, told us that the reaction was mixed from her camp. She was happy that the ordinance includes an addition of 200 taxi licenses over the next two years, but shared concern with how the 150-cap gives power to the companies and not the drivers.

“Drivers should have the authority to decide if they will work or not,” she said. “Putting that authority in the hands of the TNC companies means drivers’ leverage is diminished, and so is their job security. It’s unfortunate for a city this progressive.”

Gearhart also hopes that certain longstanding regulations for taxi drivers can be lifted to allow for innovation.

“They are still under an enormous set of Byzantine regulations,” she noted. “The law says they can only wear bermuda shorts, says that their beard has to be trimmed, says that they have to provide a printed receipt. None of these things open the door for innovation in the taxi industry.”

Eastside For-Hire manager Samatar Guled, who attended every single subcommittee meeting for the past year, said he’s just happy the city finally decided to do something.

“This is a great day,” he said. “Now everyone has to compete on a level playing field. We’re not happy with everything, but overall this is a good legislation.

Guled also shared disdain for the Council’s 150-cap.

“I don’t know how the city will enforce the cap,” he said. “What happens after the Mayor signs this — are the companies going to respect the law, or are they going to ignore it, just like they’ve done all this time?”

What the TNCs say:

Michael Cambern, a full-time driver for UberX, isn’t so sure about Guled’s claim about a “level playing field.”

“We’re limited to 150 and there are already 600 taxis on the road with 200 more coming. That’s not a level playing field,” he said. “You’re not going to see the true numbers of which one is more favored by the public or see how that plays out. In order to do that, you need to have the same numbers on the road or at least give us more of a fighting chance so we can prove what we can do.”

In light of the Council’s concern over insurance policies, Uber Seattle General Manager Brooke Steger told us that her company is in favor of everything that has to do with the safety of drivers and passengers. But she doesn’t understand why, despite thousands of people voicing support for the TNCs, the Council elected to enforce a cap.

“In terms of limiting innovation and allowing certain industries to catch up, that’s not where we should be — especially in Seattle,” she said.

Steger said that Uber will “absolutely keep fighting” the approved legislation.

In a statement, Lyft spokeswoman Erin Simpson called today’s legislation “a protectionist move that only serves the existing taxi and for-hire industries.”

“These caps have no bearing on public safety, and the motivation behind these measures was planned behind closed doors,” Simpson said. “This vote makes Seattle the only city in the country to impose a cap on peer-to-peer transportation. In doing so, the Council is disregarding the voices of thousands of citizens who spoke out in opposition to these restrictions, and is crushing new economic opportunities for Seattle residents who have chosen to provide rides to their neighbors.”

What happens next: It’s unclear when Mayor Murray will sign the bill, but expect the new laws to take effect in the next few months.

TNC passengers will likely see a decrease in available rides during busy times, especially given that there are approximately 3,000 TNC drivers in Seattle. TNC drivers will now have to compete with fellow drivers of the same company for working hours even more than they currently are. It is unclear how exactly the city will monitor each company to ensure that they have no more than 150 drivers on the streets at once. The companies will also have to implement new software into their apps to abide by the new regulations.

The City will have an employee monitoring this “pilot program,” and expects that person to report his or her findings to the Council if changes must be made — particularly in regard to the 150 number.

It will be interesting to see if the state of Washington takes any action. A state representative told us that even though Washington could override anything Seattle puts into place, the state is taking a more wait-and-see approach to the matter.

Taylor Soper is a GeekWire staff reporter who covers a wide variety of tech assignments, including emerging startups in Seattle and Portland, the sharing economy and the intersection of technology and sports. Follow him @taylor_soper and email taylor@geekwire.com.

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Comments

Viet Nguyen

Bad decision to put on the caps by the Council. I have no idea how they are going to enforce this with three staffers. Given the caps are effectively unenforceable, this just opens the city up to additional potential litigation by cab companies who will undoubtedly continue to lawyer up.

Guest

“This is a wake-up call for taxi industry,” he said. “It has to change in order to thrive. Now you have time to do that.”
Well isn’t that nice. Investors pour hundreds of millions of dollars a service that aims to provide a product in an outdated industry, one which operates a de facto monopoly and when it gets upended the city of Seattle steps in to protect it. How generous of the thoughtful “leaders” of the counsel. I’m guessing not a single one of them has ever started let alone built a business.

Realistic Guest

Well, isn’t that nice. Investors pour hundreds of millions of dollars into services that are a minor improvement on existing taxi companies, except they have this clever idea of ignoring existing laws and then claiming that they are innovating by not having licenses, inspections, or insurance. And then they’re upset when the City of Seattle steps in to protect both customers and the public from these companies that have shown they can’t be trusted. I’m guessing not a single one of the people at these out-of-state taxi companies has ever started let alone built a real business.

Jeff

Capping the Uber, Lyfts, etc to 150 drivers is not doing anything different to protect public safety. Just squeezing out the competition. All this will do is allow for additional companies to replicate their model and put 150 drivers on the road at a time. It’s silly that the Taxi lobby has so much power. If politicains want to require more strict background checks, insurance, licenses etc that is one thing, but just limting the # of drivers does nothing. Taxi drivers are upset with these innovative companies because it leads to less money for them. While this frustration is understandable it shows they are being overpaid since others can do it for cheaper. Maybe if they ditched the high costs of their lobbying efforts and unions it would mean more money in the drivers pockets….

He did the right thing. Cheering corporate oligarchy over small local businesses won’t help anyone (except the oligarchy of course who promotes itself endlessly to few naive cult followers).

guest

Feature Request for all TNCs:

Whenever the estimated wait time for a ride in Seattle is over 10 minutes, pop up a “Hail City Hall” button. When clicked, it composes an email to all the council members indicating where you are and how long you have to wait for a ride. It also asks the members of the council to either come give you a ride themselves, or remove the cap.

MichaelTompson

Why use Uber only? Use others – your wait time will be less.

Comments for free

Love to See a UberY and UberZ. Each company gets another 150 right? There is a lot of demand for these services let them operate and compete for customers. Seattle should not be in the business of caping businesses driving up prices and lowering the quality of service. Seattle has a bad rap being unfriendly to business and this is why. We should be leading the way by allowing/encouraging these inovative services not protecting the old school.

Taylor Soper

Actually, the final amendment that was approved today (No. 9) makes it so the companies can’t do something like that.

vonrock

It seems it’s mostly because they can’t enforce fees and taxes.
Why is the city deciding how many people can offer this service ? There should be Rules yes, but your cool till you break them, oh right sorry what was I thinking.

london cabbie

They have been and still are breaking City, County, State, and Federal Laws as a matter of their Billion Dollar Corporate Policy. Oh they must be too cool to follow the rule of law. I wonder if they now have State approved Insurance? Another Corporate we don’t have to Policy. TNCs are good concept, at least if done legally.

vonrock

I wasn’t aware they weren’t conforming to regulations.
that changes everything.

http://Facebook.com/justus.aguy Just Aguy

@chi1cabby #UberFraud
The strong arm tactics, the “my way or the highway” approach, lack of transparency, obfuscation and dissembling that Uber has repeatedly engaged in, has become less effective over time. Regulators/lawmakers have become wise to all this and aren’t going to fooled and railroaded anymore! Even in California, a state where Uber has been operation the longest, the regulators are taking a second look at Uber and it’s operation.

When someone engages a vehicle in COMMERCIAL CARRIER activity, s/he is REQUIRED to buy appropriate COMMERCIAL insurance! This isn’t about giving your aunt Minnie a ride to the hair salon. This is about transporting paying passengers, like a cab or a limo. Does uber really expect the regulators to have no say on the matter? We have well established laws and regs that govern every aspect of commercial activity. Just because now “THERE IS AN APP FOR THAT” doesn’t mean that these well established laws needn’t apply!
@chi1cabby #UberFraud

Nom Tacos

I see your taxi cap picture. Methinks you sir/madam are biased. So they
agree to get the proper insurance, you are just mad they provide a better service and you go cry to your union who cries to the city. Long wait times, rude cab drivers, cab drivers who take long routes to gouge customers and cabbies who complain that the rider is not paying cash is the reason people are using ride shares. All the drivers I have had via Uber have been polite, their vehicles clean and the fee was taken care of via their app before I even got in the car. Take your winey bull crap elsewhere or get off your lazy duff and provide a better service so you can compete. You afraid of competition bro?

http://Facebook.com/justus.aguy Just Aguy

Ad hominem attacks at me for speaking the truth about Uber’s tactics, and pointing out that rules/regs have to apply to all equally, even if “you have an app for that”! FYI there is no taxi driver union and I AM an UberTaxi driver!

Nom Tacos

Sooooo you are crapping on the company you work for….. Not sure if troll or serious….

http://Facebook.com/justus.aguy Just Aguy

I am not crapping on anyone! I am just pointing out the glaring hypocrisy and elitism of the ridesharers who don’t want any rules/regs applied to them regarding insurance, licensure, permitted vehicle limits etc etc, who contend that they are not in taxi/limo business by saying that they are just a shared-economy tech. platform!
I am utterly sincere and not a troll. I LIKE UBER…I’ve been an UberTaxi driver for the past two years. But I don’t appreciate them inducing/perpetuating insurance fraud, and jeopardizing public safety, by hiring UberX drivers who are not insured for ride-sharing! Thankfully SeattleCC saw through this charade and required that drivers carry commercial insurance or that UberX’s commercial policy be their PRIMARY insurance policy.

Chris Hadrick

“jeopardizing public safety by hiring UberX drivers who are not insured for ride-sharing” how is public safety affected by the type of insurance people have? How is it any different than having any other passenger in the car in terms of safety? gimmee a break

ClaimsAdjuster

When the insurance company won’t compensate parties injured by UberX drivers, as in the Sofia Liu case, that is a public safety issue.

Nom Tacos

Nota troll, just a plant. Good job douche.

http://Facebook.com/justus.aguy Just Aguy

Nice to see that you believe in civil discourse without resorting to name calling!

Ryan B

Mmmm tacos.

Competition is a big piece of this, IMO. If Uber/Lyft can operate independently outside of taxi rules and regulations, yet provide the same service, there is no way taxi’s can compete. That, by its ver nature, is not a competitive marketplace.

A good solution may be to add slight regulations to rideshares so that the barrier of entry is a little more difficult for its drivers and vehicles.

Kary

The big issue are the insurance and inspection of vehicle issues. Those are consumer protection issues. Hopefully the insurance will cover the driver too, or they might be in for a nasty surprise when the ride-share’s insurance company comes after them.

As to the caps, Uber doesn’t care if the individual drivers make money–they just want all the money that they can get. So obviously they’re opposed to caps. From the individual citizen’s point of view you really don’t want too many taxis and ride shares clogging up the streets. It will be interesting to see how the city thinks that they can enforce this.

MichaelTompson

The whole ride-sharing business model is a power grab played out in slow motion on local government authority and local government revenue. Note that there are (still) no smartphone-hail / e-hail / ride-sharing permits and law-breaking ride-sharers conveniently abuse this regulatory loophole to the fullest. When confronted, these violators deny being in a taxi business yet “forget” the fact that when founded, many even named their companies to include words like “taxi” or “cab”. For example, Uber’s original name is “Uber Cab”. Ride-sharing companies are absolutely in a taxi business, and denying it is laughable. This status quo cannot continue. It lasted far too long. The golden days of Wild West regulatory abuse may soon be over for ride-sharing law-breakers. Regulators all over the world are beginning to grasp that this flawed business model exists only the expense of reduced local revenues to our cities and our local businesses. Some US cities have outlawed ride-sharing companies completely (for non-compliance, bad business ethics, and etc.) or are in the process of outlawing them. On international stage, China has outlawed Uber recently in a few major cities. Others are beginning to sell smartphone-hail permits to put some regulatory cap over ride-sharer’s aggressive uncontrolled and frequently manipulative tactics. The fact that we are comparing legitimate small businesses owned by local taxi drivers and local fleets, to few oligarchic multi-billion dollar companies that act as a ride-sharing cartel and that operate all over the world and use technology as an excuse to break laws and regulations is utterly unfair (to say the least).

Chris Hadrick

” a power grab played out in slow motion on local government authority and local government revenue.”

good. they were the ones that benefited from the previous system and are trying to keep it in place. If they need more revenue they can try and raise taxes. if they aren’t able to they can call it a day and walk off into the sunset. No one owes them a living.

Mato In’yanka Iwastedan

These company’s have a business model that helps them skirt
rules, I am a disabled person with a service animal, try to get a TNC to pick
you up? Forget it. I think it’s time they are forced to adhere to the Americans
with disabilities act, and our state RCW codes. Whenever this very issue is
brought up to them, they have bland responses, here’s an example of the type of
stuff they dish out. Uber spokesperson Andrew Noyes told a San Francisco
reporter, “Noyes said Uber has made its app more accessible to the disability
community” this may well be true, But Uber and the other players say they are
just a middleman , and cannot force their sub-contractors to follow the law,
what a load of. Well Horse poop. If it walks like A Taxi, Squeaks like a Taxi,
and looks like a Taxi. Guess what, it’s a Taxi, and should have to follow the
same standards as a Taxi.